Dave Courtney, of GMCL Finance met with Mike Powell and Garry Marnoch of GENMO on May 13, 2015 to consider fund performance in the last quarter of 2014. Joining us for the first time was the new Vice President of Finance and Chief Financial Officer, Ines Craviotto.
The quarter ended as it began. Interest rates have been predicted to rise, but have not, which impacts the size of pension liabilities, but asset returns have been good, at 4.11%, so the funding status is stable.
2014 was a good year. In 2013, benefits payouts (including commuted value acceptances) exceeded income, but in 2014 asset returns more than offset the payouts, so the market value of the fund is higher than at the opening of 2013. Almost all the fund categories in the salaried portfolio outperformed their benchmarks, for a combined performance 33 basis points above the combined benchmark; this offset impact resulting from continuing low interest rates. (Our salaried plan outperformed the benchmark for 9 of the last 10 quarters, and 14 of the last 20.) "Emerging Markets" was slightly negative, but we are divesting this category. Canadian Equities was down 0.8% for the quarter, but for the year was positive 9.1%.
The Annual Valuation will be completed by the end of May. Since the financial crisis, our fund has moved to a more conservative investment profile, from about 80% invested in equities to around 45% currently. This means that we will not realize flashy gains as the market recovers, when compared to other plans. But we are a closed group; there will be no new members receiving defined benefit pensions from GMCL. So the important thing is to maintain the ability to meet the pension payments owed to members of this group, not to strive for overly risky returns that could imperil current payouts.
GMCL continues to make its required contributions to the fund, and plans to do so after the Prior Year Credit Balance (provided by the governments during the Bailout) gets used up. This commitment was stated again by Steve Carlisle at the General Motors Salaried Pensioners Association meeting May 12, at which he was the featured speaker.